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Higher Sales Tax Hurts Maine’s Poor

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The Left in Maine take pride in their self-proclaimed “caring for the poor.” However, rhetoric aside, their actions speak louder than their words.

Earlier this year, the Democratically-controlled legislature enacted a budget, over Governor LePage’s veto, that raised the sales tax by 10 percent (to 5.5 percent from 5 percent) and the meals and lodging tax by 14 percent (to 8 percent from 7 percent) and became effective 14 days ago on October 1. Over the next two years the higher sales tax will cost Mainers (pdf) over $134 million, and the higher meals and lodging tax will cost another $48 million.

In a great display of irony, the higher sales tax will hit the poor the hardest. Chart 1, created from an analysis from the union-backed Institute on Taxation and Economic Policy (pdf), shows that the lowest 20 percent of taxpayers pay the most in sales and excise taxes as a percent of income. Since Maine’s sales tax also applies to cigarettes, the higher sales tax also acts like an excise tax increase creating a double-whammy for Maine’s poor.